-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CtAnYeo6sUxEWxeYzVbgYMdtv9day3PPhTT6wXXKfi6IWwvEJrShuMe2LbJ8bEes gMciCjNaQ+FT1Al0/i170Q== 0001014108-99-000078.txt : 19990414 0001014108-99-000078.hdr.sgml : 19990414 ACCESSION NUMBER: 0001014108-99-000078 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 ITEM INFORMATION: FILED AS OF DATE: 19990331 DATE AS OF CHANGE: 19990413 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KINDER MORGAN ENERGY PARTNERS L P CENTRAL INDEX KEY: 0000888228 STANDARD INDUSTRIAL CLASSIFICATION: 4610 IRS NUMBER: 760380342 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-11234 FILM NUMBER: 99584118 BUSINESS ADDRESS: STREET 1: 1301 MCKINNEY ST STREET 2: STE 3450 CITY: HOUSTON STATE: TX ZIP: 77010 BUSINESS PHONE: 7138449500 MAIL ADDRESS: STREET 1: C/O MORRISON & HECKER LLP STREET 2: 2600 GRAND AVENUE CITY: KANSAS CITY STATE: MO ZIP: 64108 FORMER COMPANY: FORMER CONFORMED NAME: ENRON LIQUIDS PIPELINE L P DATE OF NAME CHANGE: 19970304 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report March 31, 1999 KINDER MORGAN ENERGY PARTNERS, L.P. KINDER MORGAN OPERATING L.P. "A" KINDER MORGAN OPERATING L.P. "B" KINDER MORGAN OPERATING L.P. "C" KINDER MORGAN OPERATING L.P. "D" KINDER MORGAN NATURAL GAS LIQUIDS CORPORATION KINDER MORGAN CO2, LLC KINDER MORGAN BULK TERMINALS, INC. (Exact name of registrants as specified in their charters) Delaware 1-11234 76-0380342 Delaware 333-66931-01 76-0380015 Delaware 333-66931-02 76-0414819 Delaware 333-66931-03 76-0547319 Delaware 333-66931-04 76-0561780 Delaware 333-66931-05 76-0256928 Delaware 333-66931-06 76-0563308 Louisiana 333-66931-07 72-1073113 (State or other (Commission (I.R.S. Employer jurisdiction File Identification of incorporation or Number) Number) organization) 1301 McKinney Street, Ste. 3400, Houston, Texas 77010 (Address of principal executive offices)(zip code) Telephone number of registrants, including area code: 713-844-9500 ---------------------- Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits (c) Exhibits 23.1 Consent of PriceWaterhouseCoopers LLP 99.1 Balance Sheet of Kinder Morgan G.P., Inc., as of December 31, 1998. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrants have duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. KINDER MORGAN ENERGY PARTNERS, L.P. (A Delaware Limited Partnership) By: KINDER MORGAN G.P., INC. as General Partner By: /s/ David G. Dehaemers, Jr. ---------------------------------------- David G. Dehaemers, Jr. Vice President, CFO, Treasurer and Assistant Secretary KINDER MORGAN OPERATING L.P. "A" (A Delaware Limited Partnership) By: KINDER MORGAN G.P., INC. as General Partner By: /s/ David G. Dehaemers, Jr. --------------------------------------- David G. Dehaemers, Jr. Vice President, CFO, Treasurer and Assistant Secretary KINDER MORGAN OPERATING L.P. "B" (A Delaware Limited Partnership) By: KINDER MORGAN G.P., INC. as General Partner By: /s/ David G. Dehaemers, Jr. --------------------------------------- David G. Dehaemers, Jr. Vice President, CFO, Treasurer and Assistant Secretary KINDER MORGAN OPERATING L.P. "C" (A Delaware Limited Partnership) By: KINDER MORGAN G.P., INC. as General Partner By: /s/ David G. Dehaemers, Jr. --------------------------------------- David G. Dehaemers, Jr. Vice President, CFO, Treasurer and Assistant Secretary 3 KINDER MORGAN OPERATING L.P. "D" (A Delaware Limited Partnership) By: KINDER MORGAN G.P., INC. as General Partner By: /s/ David G. Dehaemers, Jr. --------------------------------------- David G. Dehaemers, Jr. Vice President, CFO, Treasurer and Assistant Secretary KINDER MORGAN NATURAL GAS LIQUIDS CORPORATION (A Delaware Corporation) By: /s/ David G. Dehaemers, Jr. --------------------------------------- David G. Dehaemers, Jr. Vice President, CFO, Treasurer and Assistant Secretary KINDER MORGAN CO2, LLC (A Delaware Limited Liability Company) By: KINDER MORGAN OPERATING L.P. "A" as sole Member By: KINDER MORGAN G.P., INC. as General Partner By: /s/ David G. Dehaemers, Jr. --------------------------------------- David G. Dehaemers, Jr. Vice President, CFO, Treasurer and Assistant Secretary KINDER MORGAN BULK TERMINALS, INC. (A Louisiana Corporation) By: /s/ David G. Dehaemers, Jr. --------------------------------------- David G. Dehaemers, Jr. Vice President, CFO and Treasurer Date: March 31, 1999 4 EX-23.1 2 CONSENT OF INDEPENDENT ACCOUNTANTS CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference of our report dated March 30, 1999 on the December 31, 1998 balance sheet of Kinder Morgan G.P., Inc. included in the Current Report on Form 8-K dated March 31, 1999 of Kinder Morgan Energy Partners, L.P. in the Prospectus constituting part of the Registration Statement on Form S-3 (Nos. 333-25995, 333-62155, and 333-66931) of Kinder Morgan Energy Partners, L.P. and the incorporation by reference in the Registration Statement on Form S-8 (No. 333-56343) of Kinder Morgan Energy Partners, L.P. /s/ PRICEWATERHOUSECOOPERS L.L.P. Houston, Texas March 31, 1999 -1- EX-99.1 3 KINDER MORGAN G.P., INC. BALANCE SHEET Report of Independent Accountants March 30, 1999 To the Board of Directors and Stockholder of Kinder Morgan G.P., Inc. In our opinion, the accompanying balance sheet presents fairly, in all material respects, the financial position of Kinder Morgan G.P., Inc. (the General Partner), a wholly-owned subsidiary of Kinder Morgan Inc., at December 31, 1998, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the General Partner's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. /s/ PRICEWATERHOUSECOOPERS L.L.P. -1- Kinder Morgan G.P., Inc. (a wholly-owned subsidiary of Kinder Morgan, Inc.) Balance Sheet December 31, 1998 - - ------------------------------------------------------------------------------- (in thousands, except for per share amounts) 1998 Assets Current assets: Cash and cash equivalents $ 13,767 Receivable from Partnership 13,645 Prepaid Expenses 1,126 -------- 28,538 Investment in Partnership 41,959 Deferred taxes and other 106 -------- Total assets $ 70,603 ======== Liabilities and Stockholder's Equity Current liabilities: Accounts payable: Trade $ 1,387 Related party 2,709 Payable to Kinder Morgan, Inc. 4,332 Accrued liabilities 12,682 Accrued Taxes 1,556 -------- Total current liabilities 22,666 -------- Commitments and contingencies (Note 4) Stockholder's Equity Common stock, $10 par value, authorized, issued and outstanding 1,000,000 shares 10,000 Additional Paid in Capital 20,021 Accumulated earnings 17,916 Total stockholder's equity 47,937 -------- Total liabilities and stockholder's equity $ 70,603 ======== The accompanying notes are an integral part of these financial statements. -2- Kinder Morgan G.P., Inc. (a wholly-owned subsidiary of Kinder Morgan, Inc.) Notes to Balance Sheets December 31, 1998 - - ------------------------------------------------------------------------------- 1. Organization Effective February 14, 1997, Kinder Morgan Inc. (KMI) acquired all of the issued and outstanding stock of Enron Liquids Pipeline Company (ELPC), and ELPC was renamed Kinder Morgan G.P., Inc. (the General Partner). The General Partner owns approximately 3.8% of Kinder Morgan Energy Partners, LP (the Partnership) as of December 31, 1998. The ownership interest consists of a 2% General Partner interest and 862,000 common units of the Partnership. KMI's acquisition of the General Partner was accounted for under the purchase method of accounting and reflects the pushdown of the debt incurred in connection with the acquisition of the General Partner. The purchase price of the General Partner was approximately $21,745,000. The collateral on the debt incurred in connection with the acquisition consists of pledges of the stock of the General Partner and the General Partner's assets. Accordingly, the accompanying balance sheet reflects KMI's basis in the assets acquired and the debt incurred in the acquisition (Note 3). The General Partner's equity in the earnings of the Partnership is recorded beginning February 14, 1997. 2. Summary of Significant Accounting Policies The following significant accounting policies are followed by the General Partner in the preparation of the financial statements. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. Cash and Cash Equivalents Cash equivalents consist of highly liquid investments that are readily convertible into cash and have an original maturity of three months or less at date of acquisition. Debt Issue Costs Debt issue costs are amortized using the interest method over the term of the financing for which they were incurred. Investment in Partnership The General Partner's investment in the Partnership is accounted for under the equity method. At December 31, 1998, the General Partner's investment in the Partnership exceeded its share of the underlying equity in the net assets of the Partnership by approximately $9,210,000. This excess is being amortized on a straight-line basis over 25 years, which approximates the useful lives of the Partnership's assets ranging from 2.0% to 12.5%. -3- Kinder Morgan G.P., Inc. (a wholly-owned subsidiary of Kinder Morgan, Inc.) Notes to Balance Sheets December 31, 1998 - - ------------------------------------------------------------------------------- Income Taxes The General Partner files a separate federal income tax return and accounts for income taxes under the liability method prescribed by Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." Deferred income taxes are determined based on temporary differences between the financial reporting and tax basis of the General Partner's assets and liabilities using enacted tax rates in effect during the years in which the differences are expected to reverse. 3. Long-Term Debt On February 14, 1997, KMI entered into a borrowing agreement with First Union National Bank (First Union) in connection with the acquisition of the common stock of the General Partner. Pursuant to this agreement, KMI issued two notes in the aggregate amount of $15,000,000, bearing interest, at KMI's option, at either First Union's Base Rate plus one-half of 1% or LIBOR plus 2.5%. The notes are payable August 31, 1999. Effective December 31, 1997, the borrowing agreement was amended to provide a $15,000,000 facility note in place of the two notes issued February 14, 1997. The interest rate and maturity date remained unchanged. The borrowing agreement was amended in 1998 to provide a term loan commitment for an additional $85 million. Along with the increased borrowing, the interest rate and maturity date were changed to First Union's Base Rate plus one-half of one percent or LIBOR plus three percent and to a maturity date of May 31, 2000. KMI has pledged the stock of the General Partner and the General Partner's assets as collateral for this term loan commitment. At December 31, 1998, KMI had principal amounts outstanding of $100 million. 4. Litigation, Commitments and Other Contingencies Litigation The General Partner, in the ordinary course of business, is a defendant in various lawsuits relating to the Partnership's assets. The Partnership made certain acquisitions during 1998 and assumed potential and existing claims associated with those acquisitions. Although no assurance can be given, the General Partner believes, based on its experience to date, that the ultimate resolution of such items will not have a material adverse impact on the General Partner's financial position. It is expected that the Partnership will reimburse the General Partner for any liability or expenses incurred in connection with these legal proceeding. -4- Kinder Morgan G.P., Inc. (a wholly-owned subsidiary of Kinder Morgan, Inc.) Notes to Balance Sheets December 31, 1998 - - ------------------------------------------------------------------------------- FERC The Partnership and certain of its subsidiaries are defendants in several actions in which the plaintiffs protest pipeline transportation rates with the Federal Energy Regulatory Commission ("FERC"). These actions are currently pending. The Plaintiffs seek to recover transportation overpayments and interests and in some cases treble and punitive damages. The General Partner is not able to predict with certainty whether settlement agreements will be completed with some or all of the complainants, the final terms of any such settlement agreements that may be consummated, or the final outcome of the FERC proceedings should they be carried through to their conclusion, and it is possible that current or future proceedings could be resolved in a manner adverse to the Partnership which could affect future cash distributions to the General Partner. Environmental The General Partner is a defendant in two proceedings (one by the State of Illinois and one by the Department of Transportation) relating to alleged environmental violations for events relating to a fire that occurred at the Morris storage field in September, 1994. Although no assurance can be given, the General Partner believes the ultimate resolution of these matters will not have a material adverse effect on the Partnership's financial position, results of operations, or its ability to pay cash distributions to the General Partner. The Partnership is subject to environmental cleanup and enforcement actions from time to time. In particular, the federal Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA" or "Superfund" law) generally imposes joint and several liability for cleanup and enforcement costs, without regard to fault or the legality of the original conduct, on current or predecessor owners and operators of a site. The operations of the Partnership are also subject to Federal, state and local laws and regulations relating to protection of the environment. Although the Partnership believes its operations are in general compliance with applicable environmental regulations, risks of additional costs and liabilities are inherent in pipeline and terminal operations, and there can be no assurance significant costs and liabilities will not be incurred by the Partnership. Moreover, it is possible that other developments, such as increasingly stringent environmental laws, regulations and enforcement policies thereunder, and claims for damages to property or persons resulting from the operations of the Partnership, could result in substantial costs and liabilities to the Partnership which could affect future cash distributions to the General Partner. The Partnership, along with several other respondents, has been involved in one cleanup in connection with an acquisition made by the Partnership in 1998. This cleanup, ordered by the United States Environmental Protection Agency ("EPA"), related to ground water contamination in the vicinity of the Partnership's storage facilities and truck loading terminal at Sparks, Nevada. The EPA approved the respondents' remediation plan in September 1992 and the remediation system began operation in 1995. In addition, the -5- Kinder Morgan G.P., Inc. (a wholly-owned subsidiary of Kinder Morgan, Inc.) Notes to Balance Sheets December 31, 1998 - - ------------------------------------------------------------------------------- Partnership is presently involved in 18 ground water hydrocarbon remediation efforts under administrative orders issued by the California Regional Water Quality Control Board and two other state agencies. Although no assurance can be given, the General Partner believes the ultimate resolutions of these matters will not have a material adverse effect on the Partnership's financial position, result of operations, or its ability to pay cash distributions to the General Partner. Other The Partnership, in the ordinary course of business, is a defendant in various lawsuits relating to the Partnership's assets. Although no assurance can be given, the General Partner believes, based on its experience to date, the ultimate resolution of such items will not have a material adverse impact on the Partnership's financial position, results of operations, or its ability to pay cash distributions to the General Partner. 5. Related Party Transactions Receivable from Partnership The receivable from Partnership represents primarily general and administrative expenses paid by the General Partner on behalf of the Partnership. Payable to KMI The payable to KMI is the result of KMI's payment of costs associated with debt, such as interest and debt issue costs incurred by KMI. The payable to KMI also includes approximately $1,759,000 related to income taxes paid by KMI on behalf of the General Partner as of December 31, 1998. -6- -----END PRIVACY-ENHANCED MESSAGE-----